Kenya moved up two places to rank eighth in the year 2022 in Absa Africa Financial Markets Index (AFMI).
This was anchored on better environment, social and governance market frameworks as well as improving market transparency, tax, and regulatory environments in capital markets.
It had previously held six points and has obtained 61 points, up from 55 in the same period last year.
Besides Kenya, neigbouring Uganda and Namibia also witnessed the greatest increase in scores in a similar period last year.
Uganda ranked highest in the East African region at fourth place, up from sixth place last year, due to strides in stabilising foreign exchange rates as well as making long-term plans to transform the capital markets and economy by adopting international standards.
South Africa, Mauritius, and Nigeria maintained their positions in the top three this year, as they continue to score highly on measures of market depth, transparency, and enforceability of legal agreements.
“This index has stimulated transparency in markets, enhanced policy-making, and allowed for the development of Africa-focused alternative investment products that will have an impact for generations to come. We look forward to continuing to contribute to the building of more robust markets and attracting investment capital,” said Charles Russon, Chief Executive of Absa Corporate and Investment Banking.
The AFMI 2022 report recognised the incorporation of climate risks into financial stability regulation in Kenya.
The AFMI, now in its sixth year, presents a broad view of financial market progress. The Index showed improving market infrastructure in the continent as countries responded positively to the need to develop domestic financial markets to protect economies from external shocks.
This year, coverage has expanded to 26 countries with the addition of the Democratic Republic of the Congo, Madagascar, and Zimbabwe.
Even as challenging market conditions weighed on performance in the index, 19 of the 26 countries improved their scores relative to last year. This was largely due to broad-based progress in developing sustainable financial markets, which is becoming increasingly important to global investors.
Greater product diversity lifted scores for most countries too, including Angola and Lesotho, which both issued their first initial public offerings over the past year.
The index also recognises the contribution of digital initiatives and innovations to African financial market development. While not directly influencing scores, the report highlights countries’ progress in upgrading market infrastructure, transparency, and regulation using new technologies. It sheds light on various financial inclusion initiatives that help to build a broader domestic investor base.
According to the report, continued progress on sustainability, digitalization, and financial inclusion will be crucial to improve Africa’s appeal and access for investors, enabling the continent to develop its resilience to any future external shocks.